12. MasterTech is a new software company that develops and markets productivity software for municipal government applications. In developing their income statement, the following formulas are used:

gross profit  net sales  cost of sales net operating profit  gross profit  administrative expenses  selling expenses net income before taxes  net operating profit  interest expense net income  net income before taxes  taxes Net sales are expected to be $900,000. Cost of sales is estimated to be $540,000.

Selling expenses have a fixed component that is estimated to be $90,000 and a variable component that is estimated to be 7% of net sales. Administrative expenses are $50,000. Interest expenses are $10,000. The company is taxed at a 50% rate. Develop a spreadsheet model to calculate the net income. Design your spreadsheet using good spreadsheet-engineering principles.